Although risk-adjusted capitation payments have commonly been implemented by public and[unreadable] private insurers, few risk adjustment models have been estimated specifically for children.[unreadable] Increasing reliance on cost containment mechanisms, such as managed care and capitation in[unreadable] both private markets and public programs targeting children, makes the need to set adequate[unreadable] capitation rates for children more urgent. This study addresses this need by developing risk[unreadable] adjustment models for children, especially children with special health care needs (CSHCN),[unreadable] who are particularly vulnerable in the current health insurance marketplace dominated by[unreadable] managed care plans. The goal of the proposed project is to inform policy-making on three[unreadable] important issues of health care financing for children: (1). How well can risk adjustment models[unreadable] estimated specifically for children perform? (2). How much are health plans? incentives for risk[unreadable] selection reduced under different risk adjustment models for children? and (3). How much can a[unreadable] mixed system of both risk-adjusted capitation and risk-sharing (i.e. reinsurance funded by the[unreadable] sponsor) reduce selection incentives?[unreadable] This study has four specific aims:[unreadable] Specific Aim 1: To assess the persistence of high expenditures among CSHCN and the[unreadable] persistence of CSHCN status.[unreadable] Specific Aim 2: First to estimate a risk adjustment model using information about CSHCN, and[unreadable] then to assess its predictive performance through comparison with the diagnosis-based models.[unreadable] Specific Aim 3: To simulate health plans? potential profits from risk selection under different risk[unreadable] adjusters.[unreadable] Specific Aim 4: To investigate health plans? potential profit under the mixed system that has both[unreadable] risk-adjusted capitation rates and risk-sharing. Two types of risk-sharing will be examined,[unreadable] including outliers risk-sharing for high-cost children and condition-specific risk-sharing.[unreadable] This study fits in the Agency of Healthcare Research and Quality's (AHRQ) priority program[unreadable] area of "Identifying Strategies to Improve Access, Foster Appropriate Use, and Reduce[unreadable] Unnecessary Expenditures." In particular, it will use the AHRQ's Medical Expenditure Panel[unreadable] Survey (MEPS) to assess how changes in financial arrangements affect access to care by[unreadable] CSHCN, a vulnerable population of special interest to the AHRQ.[unreadable]